state of the internet 2012

1st Quarter 2012 State of the Internet

2 © comScore, Inc. Proprietary and Confidential.

Agenda

Worldwide Context

US Vital Signs

State of the Internet – Video – Search – Mobile – eCommerce

Monetization


In 1996, 2/3 of the world’s Internet population was in the US, yet today Asia Pacific is the largest region with over 41% of the population.

Many emerging regions are likely to bypass old modes, skipping dial-up to go straight to broadband, making multimedia, video, and collaborative content immediately accessible.

Early adoption of mobile web in addition to PC web will likely be popular in many of these high-growth areas.

14.6%

8.9%

8.8%

41.0%

26.6%

Middle East - Africa

Europe

North America

Asia Pacific

Latin America

Distribution of Worldwide Internet Audience

66%

13%

34%

87%

1996 2012

US Internet Population vs. Rest of the World

Rest of the World

US

The US Is No Longer the Center of the Online Universe

Source: comScore World Metrix, March 2012


Internet Users Age 15+ (MM)

9% Worldwide Growth Fueled by Country Growth

333.3 190.7

73.5 56.3 56.0

51.5 45.5 43.2

37.6 31.0 28.6

24.0 23.6 22.8 21.6

China

United States

Japan

India

Russian Federation

Germany

Brazil

France

United Kingdom

South Korea

Italy

Canada

Turkey

Mexico

Spain

While US user growth was just 5.3% over the past year, India, Italy,

Mexico, and the Russian Federation have experienced impressive growth

rates of 32%, 24%, 22%, and 18% respectively.



Average Hours Per Visitor Per Month

44.3 38.8

35.1 33.8

33.0 31.8

30.4 30.2

28.7 28.6 28.4 28.2 28.1

26.5 26.5

Canada

United States

United Kingdom

Netherlands

Turkey

Israel

Thailand

Poland

Vietnam

Norway

Brazil

Russian Federation

Finland

Argentina

Hong Kong

Online Engagement by Country

Canada is consistently the most engaged country. The average visitor spent more

than 44 hours online in March 2012.



More Worldwide Unique Visitors Are Spending More Minutes on Social Networking Sites than Email Sites

0200,000400,000600,000800,000

1,000,0001,200,0001,400,000

Mar-2011 May-2011 Jul-2011 Sep-2011 Nov-2011 Jan-2012 Mar-2012Uniq

ue V

isito

rs (0

00)

Global Total Unique Visitors (000)

Email Social Networking

+17%

+13%

0

100,000

200,000

300,000

400,000

500,000

Mar-2011 May-2011 Jul-2011 Sep-2011 Nov-2011 Jan-2012 Mar-2012

Min

utes

(MM

)

Global Total Minutes (MM)

Email Social Networking

+37%

+3%



Agenda

Worldwide Context

US Vital Signs


Monetization


Is the US Internet Really Still Growing?

Total US Internet Users

0

50,000

100,000

150,000

200,000

250,000

Total Unique Visitors (000) Average Daily Visitors (000)

+6%

+5% Yes, the US Internet is still growing, albeit not as quickly as it had been.

The Average Minutes per Visitor grew 9% over the past year.

The average internet user made 4 more visits to the internet in March 2012 than in March 2011.

Total US Internet Engagement

0

500

1,000

1,500

2,000

2,500

Average Minutes per Visitor Average Visits per Visitor

+7%

+9%

Source: comScore US Media Metrix Panel Only Data, March 2012


What Online Categories are Driving Web Usage?

The 31+ hours the average user spends online is divided among several key content categories such as Social Media, Entertainment, and Portals.

Top Categories Reach Top Categories Engagement


0

100

200

300

400

Aver

age

Min

utes

/UV

-7% +16%

+24%

+10% +11% +2% 85%

90%

95%

100%

Reac

h

+1% +3% -3%

-1%

Y/Y % change Y/Y % change

-1% 0%


Which Categories are Driving Web Growth?

As expected in an election year, Political sites saw terrific growth year over year at 132%.

The Gay/Lesbian category continued to see impressive growth, growing 93% between March 2011 and March 2012.

Source: comScore US Media Metrix Panel Only Data March 2012

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

UVs

(000

)

March 2011 UV's March 2012 UV's

+132%

+93%

+54%

+52%

+47%

+46%

+29%

+30%

+28%


Unique Visitors to social networking sites have increased 6% year over year

-10,000

5,000

20,000

35,000

50,000

65,000

80,000

95,000

110,000

125,000

140,000

155,000

170,000

Facebook Twitter Tumblr LinkedIn Pinterest

UV

s (0

00)

+4%

+58%

+168%

+67%

Since reporting began in May 2011, the idea sharing website Pinterest has seen exponential growth in Unique Visitors.

+4377%



Pinterest is the fastest growing social media site in both Unique Visitors and Clicks on search engines

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Sear

ch E

ngin

e Cl

icks

(000

)

Uniq

ue V

isito

rs (0

00)

Unique Visitors (000) Search Engine Clicks (000)

Pinterest is a content sharing website in which users “pin”

images and videos to share in an online community. Since reporting began in May, it is the fastest growing social

media site of the past year.

Source: comScore US Media Metrix Data


Pinterest buyers spend more, buy more items, and conduct more transactions than other social media buyers

4.20

4.40

4.60

4.80

5.00

5.20

5.40

5.60

2.70 2.80 2.90 3.00 3.10

Item

s pe

r Buy

er

Transactions per Buyer

Bubble size = Dollars per Buyer

FacebookPinterestTwitterLinkedInTumblr

0

50

100

150

200

250

300

LinkedIn Pinterest Twitter Facebook Tumblr

Buying Power Index

Pinterest users are second only to LinkedIn users in the Buying Power Index of the top 5 social media sites.

However, Pinterest buyers spend more money, more often, and on more items

than any of the other top 5 social media sites.

Source: comScore US Media Metrix Data


Agenda

Worldwide Context

US Vital Signs


Monetization


The average internet user viewed 243 videos with a viewing time of 21 hours, 22 minutes

Reach of elusive audiences

Better engagement However, monetization is still a big

challenge:

User experience Rights for UGC (User

Generated Content)

Value Drivers of Online Video Advertising

Source: comScore Video Metrix, March 2012

March 2012

US Video Viewers 187MM

% Of Internet Users Who Viewed At Least One Video 83%

Total # of Viewed Videos 45.4B

YoY Growth in Video Views 33%

Videos per Viewer 243

Viewing Time per Viewer 21 hr 22 min


Males Are More Engaged Online Video Viewers than Females


Video Activity By Gender

+120% +66% +116%

93 172

755

94

313

1,807

0100200300400500600700800900

1000110012001300140015001600170018001900

UVs (MM) Videos per Viewer Minutes per Viewer

Females Males

+82% +139%


Duration Jumps as Long-Form Content Floods the Web

Total US Streaming Minutes and Video Views

Sites heavy with long-form content have continued to grow over the past year, contributing to the increase in time spent streaming.

March 2011 March 2012 Hours per Viewer 14.7 21.4 Videos per Viewer 192.1 242.6 Minutes per Video 4.6 5.3


0

50

100

150

200

250

300

Mar '11 Apr '11 May '11 June'11

July '11 August'11

Sept '11 Oct '11 Nov ' 11 Dec '11 Jan '12 Feb '12 Mar '12

Billi

ons

Total US Duration and Video Views Total Minutes Total Videos

+53%

+47%


Agenda

Worldwide Context

US Vital Signs


Monetization


Global Search Market Growth of 22% Y/Y–More Than 4.1 Million Searches per Minute

0

5,000

10,000

15,000

20,000

25,000

30,000

UnitedStates

China Japan UnitedKingdom

Germany Brazil RussianFederation

France Turkey India

Top 10 Countries by Number of Searches (MM) Conducted* Apr-2011

Apr-2012+56%

+45%

+54% +35% +4% +39% +23% 11% +21%

+8%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Top 10 Search Properties by Searches (MM) Conducted Apr-2011

Apr-2012

+53% +6% 11%

-40% -7% +97% +38% +44% -16%

+21%

*Searches based on “expanded search” definition, which includes searches at the top properties where search activity is observed, not only the core search engines.

Google sites account for over two-thirds of the 177 billion searches conducted worldwide in April.

Chinese based Baidu (13.8 billion searches) was second in front of Yahoo! (9.9 billion searches).

Source: comScore qSearch 2.0, April 2012


27.7 billion searches were performed in April 2012, which marked an 8% growth rate over April 2011.

qSearch 2.0: Trends in the U.S. Search Market


Total U.S. Searches for all qSearch properties (Billions)

25.6

27.2 26.6

27.4 27.3 27.1

28.3 28.3

29.5 28.5

28.0

29.5

27.7

Apr-11 Jul-11 Oct-11 Jan-12 Apr-12

Change vs. April-11

+8%


qSearch 2.0: Trends in the U.S. Search Market

Increases in search intensity by Heavy Searchers and Medium Searchers helped drive search growth.


Searches per Searcher

Heavy Searchers (Upper 20%) Moderate Searchers (Middle 30%) Light Searchers (Bottom 50%)

Search Intensity Segment Contribution to Total Searches

63.8%

27.2%

9.0%

Percentage of Searches

22.5 21.9

108.6 110.5

370.9 389.0

0

50

100

150

200

250

300

350

400

450


Change vs. April-11

+5%

+2%

-3%

22 © comScore, Inc. Proprietary and Confidential. Source: comScore qSearch 2.0, April 2012

Leading Search Properties: Searches per Searcher

Google Sites 0%

Yahoo! Sites +2%

Microsoft Sites +19%

AOL, Inc. +9%

Ask Network -2%

Microsoft, Yahoo!, and AOL show intensity growth versus a year ago.

qSearch 2.0: Leading U.S. Search Properties

83.4

27.8 30.4

9.3 7.8

0

10

20

30

40

50

60

70

80

90


Change vs. April-11


Agenda

Worldwide Context

US Vital Signs


Monetization


Mobile On Track to Eclipse the Desktop

Source: Morgan Stanley Research

0200400600800

1,0001,2001,4001,6001,8002,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

DesktopMobile

Number of Global Users (Millions)


Smartphone 45.6%

Not Smartphone

54.4%

U.S. Smartphone Penetration

How the U.S. Mobile Market Has Changed – Highlights of Q1 2012

The number of Smartphone owners grew by 47% year-over-year in March 2012

In March 2012 there were 106.7 million Smartphone owners.

Product: MobiLens

Data: Three month average ending March 2012

Country: US, N= 30,963

106.7 million

0

20,000

40,000

60,000

80,000

100,000

# Ph

one

Ow

ners

(000

)

Growth of U.S. Smartphone Installed Base

+47% Year on Year Growth


Product: MobiLens



Continuous Decline of Feature Phones as Newly Acquired Devices

In March 2012 62.9% of new phone acquisitions were Smartphones.

Google and Apple accounted for the majority of new device acquisitions in Q1

Google had a share of 58%, while iPhones made up just over 26% of new Smartphones.

47.5% 48.0% 52.5% 59.5% 62.9%

52.5% 52.0% 47.5% 40.5% 37.1%

0%10%20%30%40%50%60%70%80%90%

100%

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

% A

cqui

red

Devi

ce in

Mon

th

New Devices Acquired by Type

Smartphone Not Smartphone

Google 58.3% Apple

26.3%

RIM 9.5%

Microsoft 4.6%

Other OS 1.3%

New Smartphones Acquired by OS


Android And Apple Devices Dominate U.S. Smartphone Market

Google’s Android platform share grew rapidly over the past year, increasing its market share to 51.0%.

Apple’s share increased from 25.0% to over 30%. Android and Apple combined now account for over 80% of the Smartphone market.

RIM has taken 3rd position in the Smartphone market. In March 2012, RIM handsets accounted for only 12.3% of all Smartphones

Microsoft based devices also lost market share and represented 3.9% in March 2012.

Product: MobiLens



5.1% 2.1%

7.5% 3.9%

27.1%

12.3%

25.5%

30.7%

34.8%

51.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

March 2011 March 2012

% S

mar

tpho

ne In

stal

led

Base

Smartphone Operating System Share

Google

Apple

RIM

Microsoft

Other OS


15.0% of all U.S. Smartphone Owners Accessed Digital Books or Magazines on their phones in March 2012

Product: MobiLens



16.8% of these 16 million Smartphone owners accessed digital books or magazines on their devices ‘almost every day’.

Amazon’s app had the highest reach among all Smartphone owners using eReader apps.

16.8%

29.2%

54.0%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%

Almost everyday

At least onceeach week

Once to threetimes throughout

the month

Frequency of Accessing Digital Books or Magazines

38%

19% 16%

16%

11%

Reach of apps among Smartphone owners with eReader apps

Amazon.comGoogleBarnes & NobleiBookeReader.com


8.9%

24.9%

March 2011 March 2012

Percentage of Smartphone Audience Also Owning a Tablet

Multi-Device Ownership: The Rise of the Digital Omnivore

Tablets have led to the rise of the “Digital Omnivore” – consumers who engage seamlessly with multiple online touch points daily.

24.9% of all U.S. Smartphone owners also owned a tablet, up 308% from the previous year.

Product: MobiLens

Data: One month snapshot, March 2011 / March 2012



Agenda

Worldwide Context

US Vital Signs


Monetization


Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12

Overall e-Commerce dollar sales have posted double-digit gains in every quarter since Q4 2010 and are now well ahead of pre-recession levels

Billi

ons

($)

e-Commerce Dollar Sales ($ Billions) Source: comScore e-Commerce Measurement

+13% +6% -3% 0% -1% -2% +3% +10% +9% +9% +11% +12% +14% +13% +14% +17%

% Chg vs. YA

$30.6 $30.3

$38.1

$31.0 $30.2 $29.6

$39.0

$33.9 $32.9 $32.1

$43.4

$38.0 $37.5 $36.3

$49.7

$44.3 Compared to pre-recession levels (Q1 2008), total retail in Q1 2012 is

up 10%...

e-Commerce is up +42%


Led by Amazon’s +29% growth, many retail sites posted double-digit gains in unique visitors in Q1 vs. a year ago

Avg. Monthly UVs (MM) on Select Retail Sites in Q1 2012 Source: comScore Media Metrix, U.S.

12.9

12.9

13.4

15.7

19.9

24.7

28.2

39.7

48.3

107.4

Macy's Inc.

Hewlett Packard

Sears.com

Ticketmaster

Best Buy Sites

Target Corporation

Netflix.com

Wal-Mart

Apple.com

Amazon Sites +29%

+25%

+18%

+9%

+8%

+12%

+42%

+23%

-21%

+26%

Y/Y Change


About 1 in 10 consumers had aided awareness of the term ‘showrooming’

“Showrooming” – verb. Visiting a brick-and-mortar store to see a product but instead purchasing the product online. Shoppers may intend from the start to purchase the product online, or may decide to purchase online, rather than in-person, after viewing the item at the store.

12%

16%

8%

% who have heard of'showrooming'

All respondents

Men

Women


35% of respondents have engaged in ‘showrooming’. Most intended to buy at brick-and-mortar but changed their mind at the store

Consumer Usage of Showrooming Q. Based on this definition, have you ever done this activity? (showrooming)

Source: comScore Survey – April 2012

Who’s engaging in showrooming?

35% of all respondents

50% of respondents ages 25-34, the highest of any age group

48% of tablet owners and 43% of smartphone owners

43% of Millenials*

* - defined as ages 18-29

…and did they plan it?

6 in 10 ‘showroomers’ say they originally planned to purchase at the store, but changed their mind while there & instead bought online

32% said they went to the store always intending to buy online


72%

45%

24%

18%

17%

5%

Price was better online

Planned to buy online but wanted to see item(s)in person before ordering

Item was out of stock at store

Would rather have item(s) shipped to home thantake home with me

Was not convenient to buy in-person at the time

Other

% among those who engaged in 'showrooming'

Price was the biggest driver of ‘showrooming,’ while some wanted to see item in person before deciding to purchase

Why Consumers Are Engaging in ‘Showrooming’ Q. Which of the following describe why you utilized showrooming? (Please select all that apply)

Source: comScore Survey – April 2012

Location, Location, Location Respondents living in urban areas were nearly twice as likely (26%) to choose this option than those living in suburban or rural areas (15% for both)


Consumer Electronics and Apparel were the most popular categories among consumers who bought via showrooming

Product Categories Most Likely to be Purchased via Showrooming Q. Which of the following types of item have you bought online after using ‘showrooming?’

(Please select all that apply) Source: comScore Survey – April 2012

63%

43%

29%

22%

22%

16%

10%

Consumer electronics

Apparel, clothing & accessories

Books

Appliances

Toys

Jewelry / watches

Other

% among those who engaged in 'showrooming'


Agenda

Worldwide Context

US Vital Signs


Monetization


US Online Ad Spend Poised to Grow 18% in 2012

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2010 2011 2012 2013 2014 2015

US Online Ad Spending 2010-2015 $ Billions and % Change

8.8% 14.9%

20.2% 17.6% 12.0% 10.4%

Source: eMarketer: US Online AdSpend Poised to Grow 20% in 2011


Who are the top advertisers in the online market in March 2012?

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

10,000,000

Tota

l Dis

play

Ad

Impr

essi

ons

(000

)

Top 10 Online Advertisers

Source: comScore US Ad Metrix, March 2012

Telecommunications company AT&T has a large online advertising presences.

Top advertisers also include Microsoft and business/finance companies, Experian and Scottrade.


Campaign In-view ad rates ranged from: US 55% to 93% EU 64% to 72% CA 56% to 74%

US 69%

AVERAGE 67%

AVERAGE

EU 65%

AVERAGE

CA

Are consumers actually seeing the ads?

Source: comScore vCE Charter Studies


Large sites within a content category do a better job than smaller sites at ensuring the ads are actually viewable

Percentage of Ads Served In-View within a Given Site Category

The difference in in-view rates between Top 50 sites versus the long tail sites in their category

was a full 16-percentage points



Digital Ad Economics: The good guys aren’t necessarily winning

Correlation of In-View Rates & CPM

An equally as weak correlation was also observed between CPM and ability to hit a primary demographic target



Thank You!

state of the internet 2012

Business